Question
On April 1, 20-3, Kwik Kopy Printing purchased a copy machine for $50,000. The estimated life of the machine is five years, and it has
On April 1, 20-3, Kwik Kopy Printing purchased a copy machine for $50,000. The estimated life of the machine is five years, and it has an estimated salvage value of $5,000. The machine was used until July 1, 20-6.
Required:
1. | Assume that Kwik Kopy uses straight-line depreciation and prepare the following entries: |
(a) | Adjusting entries for depreciation on December 31 of 20-3 through 20-5. |
(b) | Adjusting entry for depreciation on June 30, 20-6, just prior to trading in the asset. |
(c) | On July 1, 20-6, the copy machine was traded in for a new copy machine. The market value of the new machine is $38,000. Kwik Kopy must trade in the old copy machine and pay $22,000 for the new machine. |
2. | Assume that Kwik Kopy uses sum-of-the-years-digits depreciation and prepare the following entries: |
(a) | Adjusting entries for depreciation on December 31, 20-3 through 20-5. |
(b) | Adjusting entry for depreciation on June 30, 20-6, just prior to trading in the asset. |
(c) | On July 1, 20-6, the copy machine was traded in for a new copy machine. The market value of the new machine is $38,000. Kwik Kopy must trade in the old copy machine and pay $22,000 for the new machine. |
CHART OF ACCOUNTSKwik Kopy PrintingGeneral Ledger
ASSETS | |
101 | Cash |
122 | Accounts Receivable |
141 | Supplies |
145 | Prepaid Insurance |
181 | Copy Machines |
181.1 | Accumulated Depreciation-Copy Machines |
LIABILITIES | |
202 | Accounts Payable |
219 | Wages Payable |
EQUITY | |
311 | Owners, Capital |
312 | Owners, Drawing |
REVENUE | |
401 | Sales |
416 | Gain on Exchange of Copy Machine |
EXPENSES | |
511 | Wages Expense |
512 | Advertising Expense |
521 | Rent Expense |
523 | Supplies Expense |
525 | Phone Expense |
533 | Utilities Expense |
535 | Insurance Expense |
541 | Depreciation Expense-Copy Machines |
549 | Miscellaneous Expense |
553 | Loss on Exchange of Copy Machine |
1. | Assume that Kwik Kopy uses straight-line depreciation and prepare the following entries: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a) Adjusting entries for depreciation on December 31 of 20-3 through 20-5. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional InstructionGeneral Journal Instructions PAGE 3PAGE 4PAGE 5 GENERAL JOURNAL
PAGE 1 GENERAL JOURNAL
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